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The New Principles of a Swarm Business

April 1, 2007 | Prof. Peter Gloor pgloor@mit.edu , Prof. Scott Cooper s.m.cooper@comcast.net | Strategy

In every large company, groups of creative individuals self-organize to explore and develop ideas that they care deeply about. These collaborative networks often include customers and others outside the company’s boundaries. Take, for instance, the automaker BMW, which posts numerous engineering challenges on its Web site, enabling customers and company designers to network and collaborate on developing various features of future cars.

Now collaborative innovation is being extended from the realm of idea generation and product development to the very essence of doing business. In fact, some companies have based their entire business models on collaborative networks. The classic example is Wikipedia, the free online encyclopedia that relies on a swarm of people to write, edit and fact check the information listed in its entries. According to the authors, these “swarm businesses” pick up where the e-business craze stopped, with one crucial difference: e-businesses were primarily concerned with eyeballs (getting as many people as possible to visit a particular Web site), whereas swarm businesses strive mainly to create real value for the swarm.

As companies like BMW, IBM, Novartis and others are discovering, swarm businesses require a completely new corporate mindset. Specifically, to reap the benefits of swarm innovation, companies must (1) gain power by giving it away, (2) share with the swarm and (3) concentrate on the swarm, not on making money. Although these principles differ from the traditional ways of doing business in a number of fundamental ways, they are crucial for companies to succeed in this emerging era of increased collaboration among innovators both inside and outside the organization.

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